La Niña and the printing press: why food may rise in price next year
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La Niña and the printing press: why food may rise in price next year

22 December 2020, 18:49Economy
Natural disasters and monetary policy of the world's central banks will inevitably cause a sharp rise in food prices in 2021.

The popular economist Aleksey Koloskov predicts a sharp rise in food prices next year, which will be associated with the natural disaster - La Niña, which is associated with large-scale cooling of the ocean surface in the central and eastern parts of the equatorial Pacific Ocean combined with changes in the tropical circulation of the atmosphere, namely wind, pressure and precipitation. However, not only a series of hurricanes threatens humanity, but also the uncontrolled printing of money by central banks around the world.

The fact is that food is the same exchange commodity as oil, gas, gold, and stocks, and the world exchange has traded many food products from time immemorial, the prices of which both rise and fall depending on the yield.

For example, last year was fruitful for cocoa beans, so chocolate makers have stocked up on them for future use.

Now positive sentiment reigns on the exchange, quotes are growing, updating their historical peaks, which looks somewhat strange during the coronavirus pandemic and losses of the world economy, but understandable: world central banks carry out quantitative easing, pouring about $ 1.4 billion into the global financial system every hour...

Moreover, they pass by the real sector at once - to stock exchanges, where speculators buy up everything that comes across. After all, it makes no difference to them which prices to accelerate - for oil and gas, or for wheat and sugar. The main thing is to buy at a lower price and sell at a higher price...

The same was the case in 2010-2011, when the prices for foodstuffs rose rapidly all over the world. And just then, the US Federal Reserve also carried out a quantitative easing program QE2 (monetary policy in which the US Federal Reserve buys large volumes of government bonds or other financial assets in order to inject money into the economy to expand economic activity - noted by the ed.) This is hardly a coincidence. Moreover, 10 years ago, liquidity injections were unlike the more modest ones today.

So it should be expected that La Niña, along with quantitative easing, will play a cruel joke with food prices in the new year. In the meantime, money is being printed and printed, hence oil, gold, and bitcoin are growing, which cannot but affect our well-being. But you can't explain this to the stomach...

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